|
|
|
9/6/08
|
3 comments
Bangor bank cuts dealer financing
Move looks to build customer relationships
BANGOR, Maine - Beginning next month, Bangor Savings Bank no longer will work with car dealerships that connect customers with lenders. Bangor Savings will continue to offer auto loans to customers who come to bank branches. But senior vice president Yellow Light Breen said that, effective Oct. 1, the company will stop participating in “on-the-spot” financing programs offered by dealers. These programs, also known as dealer or indirect financing, involve the dealer acting as an intermediary between the customer and a bank. “The most fundamental reason is we are focusing on trying to build long-term relationships with customers on their primary banking needs,” Breen said Friday. “While it has been a profitable business for us, we really have almost no success turning those auto loan customers through dealers into true banking customers.” The roughly 35,000 customers who already have auto loans from Bangor Savings Bank will not be affected by the decision, Breen said. Bangor Savings Bank has been ratcheting down its participation in dealer financing programs in recent years. Breen described the industry as a tough business dominated by national lenders including large banks and financing programs offered by the vehicle manufacturers. “We’re doing it solely in Maine so we will never have the economy of scale they have,” he said. Nonetheless, the Bangor-based bank now has about $400 million worth of auto loans with customers. Breen said the decision has no connection to the current national credit crunch being driven by rising home foreclosure rates. Bangor Savings reported record earnings for the year that ended March 31, deposits are growing and the bank is seeing a “very good year” for mortgage lending despite the national slowdown, Breen said. Bangor Savings apparently is not the only lending institution to get out of the dealer financing game. Ron Russell, director of Bangor operations for Darling’s Automotive, said several banks have withdrawn from the programs in recent years. Russell said Bangor Savings also has decreased its presence in the field recently, so he was not entirely surprised by the institution’s departure. Several dozen lending institutions still participate in Darling’s financing program, however. “Competition is good for customers … and it was competitive,” Russell said. “In the short term, I don’t think it is going to affect customers much.” Breen said dealer-facilitated loans represent the “vast, vast majority” of Bangor Savings’ auto financing contracts; however, customers still will be able to receive direct loans from the bank. Bangor Savings Bank operates more than 50 branches around the state and has more than $2.2 billion in assets.
Comments
Here I go once again with the comparisons. I do not know where Bangor Savings Bank got their input to make decisions such as they made concerning bank financing of vehicle loans. It is a good move, anyway. One of my banks, Metropolitan Bank of New York, handles some of my direct deposit accounts. They go to MetroBank, here in the Philippines, as MetroBank is a division in Asia of the New York parent corporation. With any new car loans, MetroBank demands at least 30% down payment...and does not accept trade-in vehicles; cash only. Pre-owned vehicles must be 3 years old at a maximum age, and the bank demands at least 50% price for the car in cash prior to loaning money for the vehicle. New car dealers, such as Honda, Toyota, Mercedes, BMW, Hyundai, Nissan and other manufacturers, can finance direct with that respective automobile manufacturer's banking establishment; Honda Credit, for instance. Financing is tough here. You cannot be over the age of 62, and a minimum age is 21. You must have steady income, and migrant-worker income is not acceptable. You must show your BIR (Bureau of Internal Revenue) documents, among other necessary proof of who you are and of income. The branch manager of the bank I use, tells me that there were many loan defaults in the past, because banks here were flippant in their consumer loan payments, and failed to protect these loans with secured bank customers who held deposits. Some people here with international bank deposits, such as I have, use more than one bank to transfer dollars to other currency, because of the low dollar exchange rate into Philippine Pesos. Dealerships sometimes, but not much, have their own bank stablishments, but these are run on the "good old boy" system. Friends of the friends of friends of someone the dealership ownerships are connected with. Clubs, such as the Rotary and Masonic lodges are examples of this buddy system, and if you are a member, even a 10% down payment will buy you a new 2009 Mercedes, as long as you can pay the monthly premiums. APR; the annual percentage rates are somewhat lower here, but if you go to an Islamic banking system, there is absolutely no interest on your loans; although you should be a Muslim; but not in all cases. But, banks in the Phils are established such as the way Bangor Savings Bank is going now, but banks that offer loans in this country, do so on such a large scale, they have ample amount of collateral to offset the loans of all types they approve, if a percentage of the loans are defaulted on. My bank manager said an average car loan is approximately $24,000.00 (US), (1.3 million pesos, apaproximately). That is just not right!! I am a Bangor Savings client and have been for over 12 years. This might just make me look at getting another bank to do my banking needs with. If it is making them money why stop it. money is money no matter how you get it. "pcme2000", The writer of the story, Kevin Miller, wrote that Yellow Light Breen, the bank's SVP, said, emphatically, in so many words, that Bangor Saving's Bank is not, and does not want to be, in the primary business of auto loans, and managing these types of loans as a co-operator with dealerships. The corporate mind-set of Bangor Savings has always been they need to focus on their customers "primary needs". Short-term loans of any kind for non-depositors of the bank (up to three or four years average) is not a "primary need" to support their customer or business/financial base. Bangor Savings, like ALL other banks, want depositors, and permanent customers. Auto loans are considered "short-term contracts", and if a customer is not a "depositor" in the bank, the administration of handling that auto loan account, nevertheless, is significant internally. It does not make the bank strong in its financial base, which is a mainstay for any bank. I will make a bet that soon, all standard FDIC banks around Bangor (and Maine) will learn that Bangor Savings' decision was appropriate. |
|
